Ambuja Cements Q1 PAT seen up 11% at Rs 451 cr

Ambuja Cements is expected to report a profit after tax of Rs 451 crore in the quarter ended March 31, 2012, a growth of 11% as compared to Rs 407.5 crore in a year ago period, according to CNBC-TV18 poll.

Sales are likely to go up by 27% to Rs 2,795 crore from Rs 2,207.05 crore year-on-year.               

EBITDA is seen going up by 15% to Rs 701 crore in the January-March quarter from Rs 611.61 crore in the corresponding quarter of last fiscal.

EBITDA margin is seen falling at 25.1% versus 27.7% during the same period.

Highlights

Ambuja's sales volume will be led by higher volumes owing to capacity additions coupled with demand pick up:
**Ambuja dispatches up 9.8% at 6.09 mt versus 5.55 mt (YoY)
**Dispatches growth driven by capacity ramp up has come on stream taking Ambuja’s installed capacity to 27mtpa

Realizations will be aided by higher volumes and higher cement prices in areas of its existence:
**Realizations will come in even higher owing to its large presence in West India (30-35%) where prices increased by 25/bag
**Has relatively large exposure to north & west from where it gets roughly 65% of its revenue
**Price hikes were undertaken in March, 2012 to pass through the 20% railways freight increase and also excise duty hike in the budget
**Ambuja has no presence in South India where prices have remained resilient owing to production discipline

Margins to come under some pressure on a YoY basis but expand sequentially on better prices and volumes:
**Costs have increased but it will be lower relative to realization gains which will help margin progression
**Higher power and fuel costs due to dependence on indigenous coal and freight costs will limit the gains on the margins front
**Ambuja imports roughly only 30% of their coal requirement and hence will be negatively impacted by the depreciating rupee

Future outlook:

Ambuja Cements to invest Rs 1,800 crore by 2013:
-Ambuja’s has healthy cash and cash equivalents of approximately Rs 2300 crore
-Will set up a 2.2-million-tonne clinkerisation unit at Nagaur in Rajasthan
-Expand its footprint in the southern markets by setting up a new bulk cement terminal at Mangalore
-Also a new brownfield expansion project to enhance capacity at its Sankrail grinding unit in West Bengal has also been initiated